New conditions in warehouse logistics create demands for new automation solutions

I was on a conference last week and met colleagues in logistics business from whole Europe. It was interesting to discuss others experiences and challenges in their work.

I made some conclusions during these days, no
scientific research just my opinions so you have to take it for what it is.

The companies’ challenges differed a bit
depending on where in Europe you work. In east and south Europe, the biggest
challenge was lack of labor. In some parts of Europe, such as Poland, Belgium
and the Netherlands, which have become something of logistics hubs, it is a big
problem to find labor. Actually, lack of labor is the main driver for
automating the warehouses in these areas.

In Scandinavia where I live and work the
main driver for automating warehouse is labor costs. There is quite a big
difference in labor costs between east and southern Europe compared to northern
Europe. In order to be competitive, automation of various kinds is interesting
for many warehouses.

Ok so a first conclusion is that large
parts of warehouse logistics in Europe are interested in automation but for
different reasons, both regarding labor.

The next challenge is the increasing need
for agility and at the same time a lack of automation solutions that support
agility and flexibility. There have been major changes in logistics in a very
fast pace. E-commerce and omni-channel completely exploded, the problem with
this is that technological developments have not kept up with the same pace. We
remain in the same old automation solutions that we did when the warehouse
logistics were more static. There is a lot of development in the area with
different solutions, but none that are mature enough yet to be released on the
market on a large scale.

I have also noticed that B2B more often
invest in cranes or shuttle systems. They have a more balanced flow that they
are able to handle including peaks in there automation. These companies have
much more “smooth” flow and a more even and predictable growth. When it comes
to B2C with e-commerce and omni-channel, it is much more difficult. With peaks
like Black Friday and Christmas with sometimes more than 10 times higher order flow
for example it is impossible to build an automation solution that can handle
that. There is also a great uncertainty regarding the future because it is an immature
market.

3PL companies often have difficulties to
invest in automation because of short contracts that make it difficult to plan
and invest in the long term. Traditional automation is expensive with long
depreciation. At the same time, these solutions are often rigid in their flows.
It is difficult to rebuild or change these solutions. This makes it difficult
to adapt to the needs of new customers.

Second conclusion is, warehouse logistics
have a strong demand for new automation that is agile and flexible. Fewer
companies need expensive big bang solutions that are rigid in workflow because
more warehouses handle B2C with large fluctuations in order flows with huge
peaks. There is a lot of development going on but few solutions are ready for
the market. Also remember, according to Modern Material Handlings survey from
May, 90% of customers of automation highest priority is durability and uptime.
That means new companies in automation business need to have strong and well
developed service organizations to attract new customers.

My third conclusion is, many companies could
come a long way in optimization and efficiency with the help of a good WMS and
the right skills to configure WMS. Many companies are stuck focusing only on
picking processes. Two of the most labor-intensive areas in a warehouse are
goods receiving and outbound packaging. In my opinion, there are often much to
do in these areas in order to decrease the amount of man-hours in warehouse. Remember
AI have a very important role in WMS already now. There have been great results
with AI in some features. There is a differentiation in the market regarding
WMS. Those vendors who have the financial muscles to invest in development to
meet customers’ increased demands. As for example with the help of AI. These
vendors also have a very customer-driven development, which you can see by new
features in several new releases per year. Then there are the smaller vendors
who instead attract with much customized solutions but instead get few releases
and small amount of new features. Because of this, the choice of WMS is a hugely
important strategic decision for the future.

Finally, I see an exciting future in
logistics. We will see what new upcoming automation solutions that will be
popular. In addition, how software like WMS/WCS will control hardware and
interact to enhance agility and flexibility in warehouse.

2 Comments

Yes, we still on certain fronts have a long way to go – eg. silo’s still operating in ALL software.
In South Africa we also have to balance “robotics” against the huge unemployed pool and the moral obligation of looking after employees………………….